The depression talk has ratcheted up over the last few days.  On Friday, Robert Reich looked at the unemployment data, and concluded that, with one in every six workers either unemployed or underemployed, it is time to recognize that we are in a "depression."

All this means that the real economy will need a larger stimulus than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today's bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.

This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.

And in today's Wall Street Journal, Chapman University economists Steven Gjerstad and Vernon Smith (the 2002 Nobel Laureate in Economics) look at bubbles in asset markets and try to break down why some bubbles "do no damage to the financial system while another one leads to its collapse."  In doing so, they find the events of the last 10 years are "eerily similar" to events in the years leading up to the Great Depression.  And in their analysis, they focus on consumer debt.

Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.

Read Gjerstad and Smith's op-ed here.